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Janardhanam Balaji Versus The Additional Commissioner of Income Tax

2017 (8) TMI 615 - MADRAS HIGH COURT

Levy of penalty under Sections 271E and 271D - violation of Sections 269SS and 269T by reason of receipt of cash loan and repayment of loan in cash during the same assessment year - existence of substantial question of law - Held that:- Learned Commissioner of Income Tax (Appeals) arrived at the factual finding that provisions of Sections 269SS and 269T were clearly attracted as the contention of the representative of the Assessee that each of the transaction and repayment were below ₹ 20, .....

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is conferred by statute. When statute confers a limited right of appeal only in a case which involves substantial questions of law, it is not open to this Court to sit in appeal over the factual findings arrived at by the Assessing Officer, Appellate Commissioner and the Appellate Tribunal. Hence, both these appeals cannot be entertained. - Tax Case Appeal Nos. 413 and 414 of 2017 and C.M.P.No. 10330 of 2017 - Dated:- 2-8-2017 - The Hon'ble Chief Justice And Justice M. Sundar For the Appella .....

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ty under Sections 271E and 271D of the Income Tax Act, 1961 (hereinafter referred to as 'IT Act') on the appellant assessee, in respect of the assessment year 2012-2013. 2 The appellant Assessee was running a petrol pump and had filed return of income disclosing income of ₹ 5,53,851.00. In course of assessment proceedings, the learned Assessing Officer noted that the Assessee had been maintaining a book, namely, Sundry Debtors ledger, which reflected cash payments and cash receipts .....

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s levied, as it was found that there had been violation of Sections 269SS and 269T of the IT Act by reason of receipt of cash loan and repayment of loan in cash during the same assessment year. Penalty of ₹ 14,40,000.00 was imposed in respect of loan received in cash under Section 271D of the IT Act and further penalty of ₹ 14,40,000.00 was imposed under Section 271E of the IT Act in respect of the loan amount repaid in cash. 4 The Assessee appealed against the orders of the Addition .....

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on 271D of the Act is imposed for violation of the provisions of Section 269SS of the Act. Section 269SS of the Act provides that any loan or deposit shall not be taken or accepted from any other person otherwise than by an account payee cheque or account payee bank draft if, (a) the amount of such loan or deposit or the aggregate amount of such loan and deposit; or (b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the .....

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the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from such depositor is remaining unpaid and such unpaid amount along with the loan or deposit to be accepted, exceeds the aforesaid limit. Similarly, penalty under Section 271E of the Act is imposed for violation of the provisions of Section 269T of the Act. Section 269T of the Act provides that any branch of a banking company or a cooperative society, firm or other person shall no .....

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resentative that the each of the transaction and repayment was below ₹ 20,000/- and hence do not attract the mischief of the provisions of Section 269SS and Section 269T respectively is not a valid proposition. The Act mentions not just the 'amount of such loan or deposit', but also the 'aggregate amount of such loan or deposit'. Hence, in my considered view the provisions of Section 269SS and Section 269T of the Act clearly get attracted at the threshold level. 5 Learned C .....

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s are factual. 6 Section 260A(1) of the IT Act provides as follows : 260A.(1)An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal [before the date of establishment of the National Tax Tribunal], if the High Court is satisfied that the case involves a substantial question of law. 7 An appeal lies under Section 260-A of the IT Act, only when there is a substantial question of law. We find that there is no question of law involved in this appeal much les .....

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unilal V. Mehta & Sons (supra) and other judgments and summarized the tests to find out whether a given set of questions of law were mere questions of law or substantial questions of law. 10 The relevant paragraphs of the judgment of the Supreme Court in Hero Vinoth (supra) are set out herein below : 21. The phrase substantial question of law , as occurring in the amended Section 100 CPC is not defined in the Code. The word substantial, as qualifying question of law , means of having substan .....

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a second appeal shall be heard need not necessarily be a substantial question of law of general importance. In Guran Ditta v. Ram Ditta [(1927-28) 55 IA 235 : AIR 1928 PC 172] the phrase substantial question of law as it was employed in the last clause of the then existing Section 100 CPC (since omitted by the Amendment Act, 1973) came up for consideration and their Lordships held that it did not mean a substantial question of general importance but a substantial question of law which was involv .....

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with that question at some length and discuss alternative views, then the question would be a substantial question of law. On the other hand if the question was practically covered by the decision of the highest court or if the general principles to be applied in determining the question are well settled and the only question was of applying those principles to the particular fact of the case it would not be a substantial question of law. This Court laid down the following test as proper test, f .....

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by the Privy Council or by the Federal Court or is not free from difficulty or calls for discussion of alternative views. If the question is settled by the highest court or the general principles to be applied in determining the question are well settled and there is a mere question of applying those principles or that the plea raised is palpably absurd the question would not be a substantial question of law. 22. In Dy. Commr. v. Rama Krishna Narain [1954 SCR 506 : AIR 1953 SC 521] also it was .....

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irst a foundation for it laid in the pleadings and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. An entirely new point raised for the first time before the High Court is not a question involved in the case unless it goes to the root of the matter. It will, therefore, depend on the facts and circumstance of each case whether a question of law is a sub .....

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question of fact. But the legal effect of the terms of a document is a question of law. Construction of a document involving the application of any principle of law, is also a question of law. Therefore, when there is misconstruction of a document or wrong application of a principle of law in construing a document, it gives rise to a question of law. (ii) The High Court should be satisfied that the case involves a substantial question of law, and not a mere question of law. A question of law hav .....

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